Media Contact: Barbara Fornasiero; EAFocus Communications; barbara@eafocus.com
Wyandotte, Mich.—August 18, 2025— Back to school shopping season is an excellent time to educate consumers on the negatives of the Buy Now Pay Later option increasingly popular with consumers. The financing approach, usually available only through online shopping and requiring no human interaction, takes the full cost of a purchase and divides it into equal payments over a select period of time. There is frequently no interest charged and payments are made by auto payment. So, what could go wrong? Michigan Legacy Credit Union (MLCU) CEO Carma Peters encourages consumers to make sure the math adds up.
“Buy Now Pay Later can be bad math for many consumers. Despite no or low interest rates, there is significant risk that shoppers will buy more than necessary – or more than they can afford – when choosing the BNPL option,” Peters said. “Plus, missed payments are on the rise, and the rating agency FICO announced this summer that use of BNPL would now be considered in setting individual credit scores. Previously, BNPL was not used for credit score determination, which had been considered an advantage to using BNPL.”
Peters says BNPL can start or continue a dangerous pattern of overspending for consumers; further, large banks are starting to disallow use of bank credit cards to pay off BNPL loans to minimize the institution’s default risk.
“While it tends to be used for purchases under $200, multiple BNPL purchases can put people in a downward financial spiral. Now, with larger institutions looking more closely and skeptically at the use of BNPL, it’s another negative of aiming to pay for later what one cannot afford now,” Peters said.
Peters says Michigan Legacy Credit Union doesn’t rely on AI generated decision making for determining the credit worthiness of its members and encourages them to review their credit reports regularly – which they can do with a credit union representative – to avoid damaging their credit or missing a mistake on the score. They do, however, scan member credit reports to tag BNPL lenders and use this as a tool to educate members on better alternatives.
“Consumers should have a relationship with their financial institution. As a member-driven credit union that is deemed low income, we believe we have a responsibility to keep our members as financially safe as possible,” Peters said. “Even if you don’t utilize BNPL, if you have a mistake on your credit report that affects your score, that could jeopardize your chances for a home or car loan – which for most people would ultimately be more important than the accumulation of interest charges on items they can’t afford to purchase over time.”
Now, about that back to school shopping? Peters recommends creating and sticking to a budget, paying with cash or debit card when possible, and only charging what can be paid off when the bill arrives. Essentially, use a buy now, pay now approach.
About Michigan Legacy Credit Union
Michigan Legacy Credit Union (MLCU) is a member-owned, not-for-profit financial cooperative serving members who live, work, worship, attend school, or own a business in the state of Michigan. Michigan Legacy Credit Union is committed to providing quality financial services at a competitive price, delivered professionally and efficiently while keeping member/owners and their needs first. For additional information on MLCU, visit: www.michiganlegacycu.org.
